2022 (10) TMI 536 - AT - Income Tax

Addition u/s 68 - unexplained cash credits of share capital and security premium received during the year - HELD THAT - Even after providing sufficient opportunity no submission was made either before the ld. AO and ld. CIT(A) nor before us in this regard. The assessee was asked to explain the cash credits received by it during the year. The assessee failed to file necessary details to explain the source of alleged cash credit and also unable to prove identity, creditworthiness of the cash creditors as well as genuineness of the transaction as per section 68 - The assessee company has miserably failed to explain the source of alleged cash credit. If the assessee had sufficient details to explain the alleged sum, it could have certainly filed those details. Consistently escaping from appearing before the AO and the appellate authority (CIT-A) indicates that the assessee has no plausible explanation to explain the source of alleged sum of share capital and security premium. If the assessee is unable to explain the alleged cash credit and consistent escaped, the provisions of section 68 of the Act are attracted. Thus, it is held that the assessee has routed its unaccounted income in the books of account in the form of share capital and security premium by arranging bogus share capital and share premium through accommodation entry provider. Therefore, under these facts and circumstances, we find no infirmity in the finding of the ld. CIT(A) confirming the addition made u/s. 68 of the Act and the same is confirmed. Appeal of the assessee is dismissed.

Summary

Issues:
Assessment of unexplained cash credit as share capital and share premium.

Analysis:
The appeal pertains to the assessment year 2008-09 where the assessee failed to appear despite multiple notices being sent. The case involved the assessee's challenge against the addition of Rs. 10,60,50,000 as unexplained cash credit under section 68 of the Income Tax Act. The assessee, a private limited company, declared income of Rs. 630 and received share capital and share premium from shareholders. The assessing officer issued notices for verification of the transaction, but the alleged creditors did not appear, leading to the assessment being completed based on available material. The CIT(A) confirmed the addition as the assessee failed to provide further evidence to support their claim. The Tribunal noted the lack of cooperation from the assessee in presenting necessary details to explain the source of the cash credit. Despite opportunities, the assessee did not offer any submissions to prove the identity, creditworthiness, and genuineness of the transaction. The Tribunal concluded that the unexplained cash credit was likely routed as unaccounted income through bogus share capital and share premium arrangements. Consequently, the Tribunal upheld the CIT(A)'s decision to confirm the addition of Rs. 10,60,50,000 under section 68 of the Act.

The Tribunal found no merit in the grounds of appeal raised by the assessee and dismissed the appeal. The decision was pronounced in an open court on 10th October 2022.